Silicon Valley boom spills into Oakland

Just a few years ago, the idea of a start-up moving to Oakland, California, would have seemed far-fetched given the high rate of crime in the community, but that's quickly changing.

The real estate market is so red-hot in San Francisco right now that it's motivating start-ups to move into neighboring Oakland. The difference in office rent is dramatic.

Today, in downtown Oakland, the average asking rent is $34 per square foot, according to Amber Schiada, director of research at Jones Lang LaSalle, a real estate services company. In downtown San Francisco? It's $65.

Property managers in the Bay Area say that sharp difference is encouraging entrepreneurs to consider Oakland as their headquarters.

"Cost is an advantage," said Michelle Lane, a commercial property manager with CBRE. "We're less expensive here in Oakland."

"We have a lot of open space, and I think the new start-ups tend to like that," Lane said.

Those working in start-ups in Oakland say there's another attraction the city offers them: a sense of camaraderie.

"You get a tightknit community so we have parties here on our patio for the local start-up scene," said Paul Patterson, vice president of sales at Captricity, which digitizes paperwork for customers ranging from the FDA to New York Life.

But economists think the number of start-ups coming to Oakland will accelerate as entrepreneurs take advantage of cheaper office space in the community.

"There will be start-ups moving to Oakland, especially the ones needing more real estate," said Enrico Moretti, a professor of economics at the University of California, Berkeley. "Oakland could offer some start-ups a better match."